Sri Lanka’s state-run CEB loses Rs25bn in 2018

ECONOMYNEXT – Sri Lanka’s state-run Ceylon Electricity Board has lost 25 billion rupees in 2018, including 11.5 billion rupees of finance charges, while the losses have been funded with more bank loans.

CEB has posted provisional revenues of 229.35 billion rupees slightly up from 223.7 billion rupees a year earlier.

Power costs were 165.26 billion rupees and other direct costs were 87.7 billion rupees, generating an operational loss of 12.6 billion rupees.

There were other income of 10.1 billion rupees, generating a loss before interest of 13.5 billion rupees.

Finance charges were 11.53 billion rupees, leading to losses of 25.04 billion rupees.

In 2018, the Central Bank printed money and cut rates in the first quarter just as the economy was recovering, and generated monetary instability, leading to a collapse of the currency from 153 to 180 to the US dollar.

The currency collapse has increased fuel import costs.

Sri Lanka’s Central Bank and its soft-pegged exchange rate regime is a key obstacle to the progress of the country.

Monetary instability has worsened in recent year with an explicit strategy of depreciating the currency to cut real wages of the export sector through real effective exchange rate (REER) targeting.

Currency collapses also give an additional subsidy to exporters at the expense of society and future stability of the country as electricity is not market-priced. Water prices have also not been adjusted.

Finance Minister Mangala Samaraweera said in March that fuel was also priced below a formula as late as March.  (Colombo/Mar16/2019-SB)